Comments on Amit Sahasrabudhe's articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/amit-sahasrabudhe/articles http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-226633 226633 Sat, 09 Aug 2008 03:06:33 -0400
]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-223393 223393 Tue, 05 Aug 2008 15:08:46 -0400
As for McDonald's coffee, I'm talking about the premium McCafe coffee, not the regular stuff that's sitting on the boilerplate (there, it will be the luck of the draw, if it's fresh-brewed or not). Just try it one day, the premium coffee. It is actually quite good, better than Starbucks, and market research shows that most people prefer the taste over Starbucks coffee. And why wouldn't that be so? MacDonald's is not stupid. If they decide to go after the premium segment, they can hire some people who know about coffee to get the product right. This isn't rocket science.]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-221330 221330 Sun, 03 Aug 2008 01:28:56 -0400
We all need to get it out of our heads that SBUX derives any significant advantage from taste. It derives most of its competitive advantage from being cooler and more connotative of wealth than Dunkin Donuts (does Britney Spears know what excellent coffee tastes like?). Dunkin Donuts derives most of its competitive advantage from being cheaper and more "blue-collar" than SBUX (plus the donuts taste better than anything SBUX produces and cost under a dollar, but this doesn't really matter because people will eat anything). I tend to drink whatever's more convenient/whatever the people around me are drinking, but Boston construction workers are never going to drink SBUX and NYC celebrities are never going to drink DD. The marginal consumer will follow the crowds, their budget needs, the marketing, and the location quality. ]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-221325 221325 Sun, 03 Aug 2008 00:52:02 -0400 When you compare sbux and dunkin, compare the size of the cups, amount of coffee powder they use to make each cup, etc.
SBUX is a much better coffee. mcd only the cup looks good, same crap inside it.]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-221311 221311 Sat, 02 Aug 2008 23:27:34 -0400 http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-221298 221298 Sat, 02 Aug 2008 22:59:02 -0400
sell it. ]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-221218 221218 Sat, 02 Aug 2008 18:31:49 -0400
I'm very skeptical of SBUX at its current price. My feeling is that people are staring themselves blind at yesterday's growth, and are going to end up overpaying. Also, it's a "cool" company, the kind investors fall in love with. (I, on the other hand, invest to make money!)

By the way, I live in Singapore and Starbucks does very well over there (as well as elsewhere in Asia), but they better hurry up, because there's plenty of good-quality chains already eating away at the same market. There's some smart entrepreneurs with deep pockets back there also, and they're not waiting for Starbucks to show up. And frankly, some are doing a better job than Starbucks (better pastries, fresher coffee, cleaner shops, more comfortable seating...) My point is, I have no doubt that Starbucks has a lot of growth potential in Asia, but don't take it for granted, and be wary of overpaying because it's a glamour stock.

I used to own Starbucks (thought it was time to go bottom-fishing at 18.6) but bailed out of it after it slid to 15 and rose back up to 18). I might go back in if it drops to 12, but I'm not sure as there's so many other opportunities.]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-221203 221203 Sat, 02 Aug 2008 18:01:38 -0400 http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-221194 221194 Sat, 02 Aug 2008 17:20:25 -0400 http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-221182 221182 Sat, 02 Aug 2008 16:56:00 -0400
It's pretty straightforward -

-Brand: This is one of the best brands in America, with high identity and a good deal of loyalty from a diverse, aspirational demographic. Most companies would kill for a brand this good; Starbucks just needs to be sure to keep that brand intact.

-Market share: In its space, Starbucks probably has about 80% market share in the US market. Its rivals such as Caribou, Peets and Coffee Bean and Tea Leaf don't come anywhere close; none have a plan to dethrone the leader.

-Revenues: Sales continue to grow, despite a gloomy economy. This suggests that consumers are hanging on to the product, despite difficult times. They may decline a bit as troubles deepen, but this is a product that many consumers will fight to keep in their lives.

Starbucks doesn't so much as sell coffee as it does lifestyle. If it can keep its brand intact and manage its costs effectively long enough to ride through the downturn, it will emerge from the economic rebound.

I'm not completely sold on some of the project initiatives and I suspect that 2009 will have slowing revenue growth as the economic crisis deepens, but otherwise they are well poised to ride the tide upward. I expect that the stock price may slip more if the indexes take a hit, but on the fundamentals, it's a good company that will recover and eventually will merit a long position. The questions now are when, and by how much.
]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-221086 221086 Sat, 02 Aug 2008 14:24:00 -0400 http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-220761 220761 Fri, 01 Aug 2008 21:30:37 -0400
They should split the company up into 2 - a US "value" company focused on cost controls and maximizing profits (paying fat dividends) and an "international" growth company focused on geographical expansion. Atria has recently done this by carving of Phillip Morris and GM may do the same.]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-220575 220575 Fri, 01 Aug 2008 16:01:28 -0400
It seems like SBUX is in a position somewhat like C and BAC at the end of last year or earlier this year; all over the place you hear "ok, now that the bad quarter is out of the way let's get this earning power at a bargain price!" I know BAC looked great to me at 37, and although buyers at 37 aren't too far underwater now, they could have bought it down in the 20s with a little bit of patience. I mean, last month you could buy profitable banks at 5-10x their depressed earnings of the last few quarters. That's a value pick with some margin of safety. SBUX at 23x its depressed earnings? More of a speculative gamble (although it could pay off). ]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-220567 220567 Fri, 01 Aug 2008 15:52:40 -0400
Instead of opening more stores, they should just have more than 1 bar inside each store. Yet management opted to change their cup logos from green to brown, give away promotions, and lock down all of the stores for 3 hours of training?! I can't help but laugh.

Cheap? Perhaps... but I wouldn't delude myself into expectations that it will rebound to previous valuations any time soon.]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-220564 220564 Fri, 01 Aug 2008 15:51:33 -0400

Stephjen: Giving away stuff is a great strategy, especially when you are introducing new products, shifting your locations, and trying to recapture old customers and bring in new ones. Every successful retailer uses some sort of give-away strategically: mail coupons at Bed, Bath and Beyond, shopper card savings at most supermarkets, samples at Trader Joe's, new product give-aways at Dunkin Donuts and McDonald's, etc. People love free stuff and will patronize places that offer it, even if they don't get free stuff every time they go. Setting aside the lost profits from those who would have paid if the product were not free (which are significant, though offset somewhat by the idea that the giveaway is a loyalty reward for regular users), the cost to give a new customer attracted by advertising a free cup of coffee is in the ballpark of 15 cents. If they come back and buy even one thing, or pick up a cookie along with their free coffee, the store is already in the black. ]]> http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-220318 220318 Fri, 01 Aug 2008 12:22:44 -0400 http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-220091 220091 Fri, 01 Aug 2008 09:54:54 -0400 http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-220035 220035 Fri, 01 Aug 2008 09:21:01 -0400 http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-220006 220006 Fri, 01 Aug 2008 09:04:08 -0400 http://seekingalpha.com/article/88544-starbucks-on-sale-part-i?source=feed#comment-219975 219975 Fri, 01 Aug 2008 08:39:42 -0400
starbucks has different competition it faces.

mcd/7-11/sheetz for a the discount, standard coffee buyer... as other places have improved their normal brew, there's not reason for quasi-connoisseurs to go to sbux.

peets/caribou/the neighborhood coffee shop - many places now offer a similar "experience"for, once again, a smaller price.]]>